January 28, 2020

January 27, 2020

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Cruise Line Sails into Sea of TCPA Liability from Vendor’s Use of Soundboard Tech

New communications technologies are being adopted at a rapid pace by industry.  This has led to the emergence of legal questions over whether this new technology is regulated by the TCPA.  One such question, which has seen some increased attention as of late, is whether soundboard or avatar technology (where live agents play voice message files during calls) delivers a “prerecorded” message within the meaning of the TCPA.

This legal front has not seen great outcomes for users of this technology.  Early on, a trade association for companies that manufacture or use the technology fought the Federal Trade Commission over whether the technology was a “prerecorded message,” as regulated by the FTC’s Telemarketing Sales Rule.  Soundboard Ass’n v. Fed. Trade Comm’n, 888 F.3d 1261, 1267 (D.C. Cir. 2018).  The outcome of this legal battle ultimately turned on procedural issues, but the FTC’s interpretation that the technology was subject to the TSR held up on appeal.  Soundboard Ass'n v. Fed. Trade Comm'n, 888 F.3d 1261, 1267 (D.C. Cir. 2018), cert. denied sub nom. Soundboard Ass'n v. F.T.C., 139 S. Ct. 1544 (2019).

Earlier this year, a District Court in Oklahoma considered whether soundboard technology delivers a “prerecorded” message within the meaning of the TCPA, and held that it did.  Braver v. NorthStar Alarm Servs., LLC, No. CIV-17-0383-F, 2019 WL 3208651, at *6 (W.D. Okla. July 16, 2019).  And most recently, a cruise line was on the receiving end of an order granting summary judgment in favor of the Plaintiff based upon the court’s finding that the soundboard technology used by the cruise line’s vendor delivered a “prerecorded” message within the meaning of the TCPA.  Bakov v. Conslidated World Travel, Inc. d/b/a Holiday Cruise Line, No. 15 C 2980, 2019 WL 6699188 (N.D. Ill. Dec. 9, 2019).

Notably, both Braver and Bakov have striking similarities.  The defendants in both cases had nationwide classes certified against them, followed by the granting of summary judgment in favor of the Plaintiff.  In both cases, the summary judgment rulings were based upon two key holdings. The first, that the soundboard technology used by the defendants’ vendor was regulated by the TCPA.  And the second, that defendants were vicariously liable for the TCPA violations committed by their vendors through the use of this technology.    

In Bakov, the defendant had employed a vendor—an Indian call center—to make calls using soundboard technology to advertise free cruises.  Neither the Defendant nor its vendor obtained consent for the calls, but the Defendant argued that consent was not required because soundboard technology does not deliver a “prerecorded” message within the meaning of the TCPA.  It argued that playing snippets of previously recorded messages did not qualify as delivering a “prerecorded” message because the TCPA regulates “only telephone calls that deliver a single, monolithic message that is ‘blasted’ to many recipients at the same time without any variation.” 

The court rejected the interpretation of the statute urged by the Defendant, reasoning that the “plain language” of the TCPA “should be conclusive.”  The court’s holding came down to three key points: 

  1. Webster’s defines “prerecorded” as “recorded in advance.”

  2. There is nothing in the language of the TCPA that would suggest a contrary meaning.

  3. The TCPA defines numerous terms in the statute, such as ATDS, established business relationship, and telephone solicitation, but does not define “prerecorded”. Thus, “the failure to define ‘prerecorded’ differently from its plain meaning while giving a special definition for other terms . . . is evidence that Congress intended for the plain meaning of the word to control.”

Based upon these key points, the court concluded that “prerecorded means recorded in advance.”  And because agents that used soundboard were playing voice files “recorded in advance,” they were delivering a “prerecorded” message within the meaning of the TCPA.

The court’s liability findings against Defendant flowed from there.  There was no dispute in the case that the Defendant and/or its vendor did not obtain consent to make the calls.  This left the issue of whether Defendant could be vicariously liable for the TCPA violations committed by its vendor.  The court held that the Defendant was vicariously liable under an agency theory because (a) Defendant provided the vendor with scripts, which it mandated that the vendor use; (b) Defendant had sole authority to modify the script at any time; (c) the vendor was required to provide weekly performance reports; and (d) Defendant and the vendor had an agreed-upon compensation structure for leads generated from the soundboard campaigns. 

Finally, the court also found that the Defendant had willfully violated the TCPA.  Notably, it applied a fairly liberal standard in making this determination, and held that willfulness “does not require that the defendant had actual knowledge that an action violated the TCPA.”  It only requires that the Plaintiff demonstrate that the defendant knew that its vendor “was making its calls intentionally, rather than inadvertently.”  Unfortunately, this liberal standard leaves very little meaningful distinction between a plain and willful violation of the TCPA. 

Concluding Thoughts

Summing it up, the Defendant in Bakov has had a class certified against it—encompassing many millions of calls—and the court summarily found that the Defendant is liable for willful violations of the TCPA.  The only thing left to determine at this point is the amount of damages to award to the class, and that number could be of Titanic proportions given the class size. 

Bakov is yet another cautionary tale that demonstrates there is no technological silver bullet to compliance with the TCPA.  Soundboard and other newer technology that utilize any sort of prerecorded or artificial voice messages—including even the newest and most advanced AI voice technology—should be treated as regulated by the TCPA until further guidance from the FCC.  Notably, one soundboard technology provider has petitioned the FCC for a finding that the technology is not regulated by the TCPA.  But until definitive guidance follows, businesses should ensure they are obtaining appropriate consents, honoring opt-out requests, and complying with the other technical requirements for prerecorded messages under the TCPA. 

Copyright © 2020 Womble Bond Dickinson (US) LLP All Rights Reserved.

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About this Author

Artin Betpera, Class action litigation lawyer, Womble
Senior Counsel

Artin serves as a chief lieutenant on one the nation’s most experienced and powerful class action defense teams.  Precise and analytic, Artin brings over a decade of experience to bear on complex litigation problems.

Artin adeptly manages significant volumes of litigation for some of the country’s largest banks and financial institutions, never losing sight of providing an exceptional level of service to his clients.  He has been a dedicated financial services litigator since starting the practice of law at ground-zero of the financial crisis, affording him with...

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